The significance of power factor lies in the fact that utility companies supply customers with volt-amperes, but bill them for watts. Power factors below 1.0 require a utility to generate more than the minimum volt-amperes necessary to supply the real power (watts). This increases generation and transmission costs. For example, if the load power factor were as low as 0.7, the apparent power would be 1.4 times the real power used by the load. Line current in the circuit would also be 1.4 times the current required at 1.0 power factor, so the losses in the circuit would be doubled (since they are proportional to the square of the current). Alternatively all components of the system such as generators, conductors, transformers, and switchgear would be increased in size (and cost) to carry the extra current.
Utilities typically charge additional costs to customers who have a power factor below some limit, which is typically 0.9 to 0.95. Engineers are often interested in the power factor of a load as one of the factors that affect the efficiency of power transmission.With the rising cost of energy and concerns over the efficient delivery of power, active PFC has become more common in consumer electronics.[16] Current Energy Star guidelines for computers (ENERGY STARŪ Program Requirements for Computers Version 5.0) call for a power factor of ≥ 0.9 at 100% of rated output in the PC's power supply. According to a white paper authored by Intel and the U.S. Environmental Protection Agency‎, PCs with internal power supplies will require the use of active power factor correction to meet the ENERGY STARŪ 5.0 Program Requirements for Computers.[17]